The number of Americans filing new claims for jobless benefits unexpectedly fell last week, offering hope that some of last month's improvement in job growth could be sustained and give the economy a lift. Other data on Thursday showed the deficit on the trade balance in June was the smallest in 1-1/2 years as the petroleum import bill dropped sharply.
While the small trade gap implied upward revisions to the government's estimate of second-quarter gross domestic product published last month, the impact was blunted somewhat by an unexpected drop in wholesale stocks in June. Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 361,000, the Labour Department said. Economists had expected claims to rise to 370,000 last week. The data came on the heels of a report last week showing that in July employers hired the most workers in five months.
"The fact that initial jobless claims have fallen back to their March lows suggests faster employment gains will continue to support consumer spending in the coming months," said Harm Bandholz, chief US economist at UniCredit Research in New York. Nonfarm payrolls increased 163,000 in July after three months of gains below 100,000. But the unemployment rate rose by a tenth of a percentage point to 8.3 percent. Last week's report was the first in several weeks not affected by auto plant shutdowns, which caused wide swings in claims in July, making it difficult to get a clean read of the jobs market.
A second report from the Commerce Department showed the shortfall on the trade balance narrowed 10.7 percent to $42.9 billion, the smallest since December 2010, as low oil prices curbed imports. That was below economists' expectations for a $47.5 billion deficit. The petroleum import bill fell as the average price per barrel of crude oil dropped by the most since January 2009.
Immediately after the trade report, economists forecast the initial second-quarter GDP growth estimate would be revised to as high as 2.2 percent, but tempered those predictions after a later report showed a decline in wholesale inventories in June. Second-quarter growth is now seen revised up to an annual pace of at least 1.8 percent from 1.5 percent. The government will publish its second GDP estimate later this month.
Total wholesale inventories slipped 0.2 percent, the largest fall since September, after being flat in May, as the value of petroleum stocks tumbled 8.7 percent, the largest drop since October 2008. Inventories are a key component of GDP and contributed about a third of a percentage point to growth in the second quarter. Trade subtracted almost a third of a percentage point from GDP growth.
Exports in June increased 0.9 percent to a record $185.0 billion, while overall imports of goods and services declined 1.5 percent to $227.9 billion. While exports showed strength in June, anecdotal evidence suggests a slowdown because of weak global demand. The Institute for Supply Management's export index declined in July for a third straight month.
There also are concerns that the worst drought since 1956, which has ravaged half of the country, could hit agricultural exports. US exports to the 27-nation European Union, in the grip of a continuing debt crisis that has slowed growth on the continent, increased 1.7 percent in June to $23.3 billion. The EU collectively was the United States' second-largest export market last year, and exports in the first half of 2012 were 2.9 percent above the same period in 2011.
US exports to China, which is also growing more slowly than in recent years, fell 4.3 percent in June. China has been one of the fastest-growing markets for US goods, and exports to that country were up 6.7 percent for the first six months of 2012. Economists believed the drop in imports would be temporary, especially with the labour market improvement expected to lift consumer spending.